E-PAYMENT AND THEIR IMPACT IN ACCELERATING e-GOVERNMENT

1. E-PAYMENT AND THEIR IMPACT IN ACCELERATING e-GOVERNMENT “Definitions, Benefits & Business Models” by Dr. Nagwa El- Shenawi Egypt October 2004

2. Presentation Map I E-Payment Evolution in Arab Region II E-Government Benefits E-Payment accelerate E-Government III IV Recommendation & Policy Implications for Arab Countries

3. Part II. E-Payment Evolution in Arab Region 1.1 Basic Concepts 1.2 Market Structure • 1.3 Global Brand Market Share. • 1.4 Performance Indicators (Inter. / Regional). • 1.5 Ranking among Arab Countries. • 1.6 E-Commerce in Arab Countries. • 1.7 Major challenges.

4. E-Payment • Credit Card The e-payment card is a widely recognized banking instrument for meeting obligations, and it is accepted on the international and local levels, whether by individuals, merchants or banks as a cash-alternative. The card is used to pay against commodities and services provided to the cardholder. A plastic card that with a coded magnetic stripe that entitles its bearer to a revolving line of credit, whose size and interest rate are determined by the borrower’s income and credit report. 1.1 Basic Concepts

5. This card is used as a way of financing, but to a limited time period not more than a month (buy now, pay now). The cardholder has to pay his/her debts totally by the end of themonth. 1.1 Basic Concepts (Cont’d) • Debit Card It is a suitable method of accessing current and saving accounts (24 hours a day). The main role of these cards is the easiness of cash withdrawal and other financial and non- financial transactions. The ability of this card to perform at its optimum depends mainly on the growth of the national, regional and international ATM networks. A bank card with direct access to a card holder’s account, usually a current or savings account. The card acts like a check with the money withdrawn from the existing account balance. The withdrawal of funds is immediate with online debit cards, delayed a day or two with offline debit cards. • Charge cards: • ATM cards:

6. 1.2 Arab Region Market Structure Source: Visa International, MasterCard. *GDV = Gross dollar value.

7. 1.2 Egypt Market Structure (2002)-cont’d Credit Cards 633 000 Debit & ATM Cards 380 000 + Credit & Debit Cards(issued abroad) 300 000 + Total No. of Cards1310 000 ATM Machines749 P.O.S.16117

8. American Express Dinners Club 2% 3% MasterCard 38% 57% Visa International 1.3 Global Brand Market Share in Egypt Source: Nilson Report, 2002

9. 1.4 Performance Indicators Arab Region Vs International level Source: Computed by Researcher based on Visa & Master’data

10. 1.4 Performance Indicators-cont’d Egypt Vs Arab Region level Source: Computed by Researcher based on Visa & Master’data

11. 1.5 Ranking Among Arab Countries Ranking of Arab Countries by No. of Cards $ million Oman Egypt Source: Visa & MasterCard, 2002

12. 1.5 Ranking Among Arab Countries(Cont’d) Ranking of Arab Countries by Value of Transaction (Purchases) bn $ Source: Visa & MasterCard, 2002

13. 1.5 Ranking Among Arab Countries(Cont’d) Ranking of Arab Countries by Value of Transaction (Cash) bn$ Source: Visa & MasterCard, 2002

14. 1.5 Ranking Among Arab Countries(Cont’d) Ranking of Arab Countries by Volume of Transaction (Purchases) 000 Source: Visa & MasterCard, 2002

15. 1.5 Ranking Among Arab Countries(Cont’d) Ranking of Arab Countries by Volume of Transaction (Cash) 000 Source: Visa & MasterCard, 2002

16. 1.5 Ranking Among Arab Countries(Cont’d) Total Population, Total Number of Cards, Cards/1000 people Source: World Development Indicators, Visa & MasterCard 2002

17. 1.6 E-Commerce in Regions Source: Forrester Research, Inc., 2004

18. 1.6 E-Commerce in Arab Countries(Cont’d) E- Commerce in Arab Countries Source: Computed by the researcher based on World Development Indicators data, 2003

19. Lack of Efficient Credit Policy and Management • Lack of Credit Information (Credit Bureau) Major Challenges Lack of Legal Framework Inadequate Telecommunication Infrastructure 1.7 Major Challenges facing EPC

20. Part II. E-Government Benefits • 2.1 Definition • 2.2 Requirements • 2.3 Benefits • 2.4 Scenarios • 2.5 Challenges

21. 2.1 E-Government Definition • Providing public services and transactions in an electronic format (Business –Citizens) • Issuing ID card • Issuing Passport • Issuing or Renewing Driving Licenses • Issuing birth Certificate

22. 2.2 E-Government Environment • To apply the e-government the following requirements should be there: • Telecom Infrastructure • Internet Services • E-Payment • Digital Signature • Skilled people

23. 2.3 E-Government Advantages • E-government provide benefits for gov., businesses and citizens from three different axes: • Cost reduction and efficient processes • Increasing Performance • Data Accuracy • Diminishing administrative procedures • Best usage of H/R

24. 2.3 E-Government Advantages- cont’d • Excellent Public Services • Availability • Accessibility • Usability • Business Growth • Publishing • Contracting

25. 2.4 E-Government Scenarios • E-government can take more than one scenarios from the following: • Scenario 1: Telephone and Fax • Scenario 2: PC and Internet • Scenario 3: Both

26. 2.5 E-Government Challenges • Applying E-government need to deal with the following challenges: • Change Management • Reengineering government Processes • Technology Revolution • Public Private Partnership • Privacy • Security

27. Part III. E-Payment Accelerate E-Government 3.1 E-Payment Impact on E-Government • 3.2 Models /Case Studies

28. Efficiency: • The electronic card reduce the cost per transaction to be near zero as well the e-government will lead to decrease the long processes of each public service which will finally increase the performance of the governmental departments. • Improving Transparency: • A substantial proportion of financial activity in cash based-society takes place in unofficial-also known as shadow or grey economies. 3.1 E-Payment Impact on E-Government

29. Decreasing bribery and criminal activities: • Reducing fraud by paying direct into a bank account accessed by payment card. • Increasing Revenues • Money can be transferred into government accounts in 24-48 hours maximum. • Increasing Liquidity in Banks • Best use of Human Resource 3.1 E-Payment Impact on E-Government–cont’d

30. 3.2 Models /Case Studies • South Korea Case Study • Introduce number of measure to encourage card use, including mandating acceptance at all businesses with a turnover of more than $18000 a year and discounts on tax payable by businesses and individuals that used payment cards. In 1998, when the programme was launched , the tax take was $46 bn-14% of GDP. By 2001, the figures has risen to $76 billion and 17% of GDP.

31. 3.2 Models /Case Studies- cont’d • Moscow Case Study • The Moscow Social Card demonstrated social impact and economic benefits. All 2.3 million Moscow residents who receive social benefits-students, pensioners, members of the armed forces, are being given chip card. The card currently includes metro ticketing, health and medical insurance details, as well as giving access to pension payments, government subsidies and discounts in specified retailers. Moscow is expected to cut the cost of administering and reduce fraud. It is already seeing success in this area, with a $30 million reduction in fraud city’s student travel pass and 20% increase in revenue by Moscow Metro.

32. 3.2 Models /Case Studies- cont’d • UK Case Study UK government is moving all basic purchasing and travel spending to cards. HM Secretary of the UK Treasury estimates that UK government will save £300 million over five years using this card. An example of department’s purchase of six months’ worth of photocopy toner. In the past this simple transaction might have 50 separate process steps often over 2 hours of direct labor. By contrast, the same transaction with a corporate purchasing card can drop to less than 30 minutes of total direct labor. It may be more than 70% less costly all purchase order and payment processes can be combined into single step.

33. 3.2 Models /Case Studies- cont’d • Dubai Case Study More than 1000 services are provided electronically through 26 governmental department and organizations in Dubai; i.e. Police dept., Transport Dept., citizenship dept…etc. The above mentioned organizations did their best to provide their services through Dubai Portal on the internet in an efficient manner. The government of Dubai has succeeded to issue non traditional payment channels or electronic payment to be used by customers to pay their public services’ fees through secured way of payment; electronic dirham or credit card.

34. 3.2 Models /Case Studies- cont’d • Egypt Proposed Models • Tax Payment Card • Customs Card • Car License Renewal

35. Part IV. Recommendations, & Policy Implications • 4.1 Policy Implications • 4.2 Recommendations

36. 4.1 Policy Implications • Setting E-payment Initiative in Arab Countries • Activating the Electronic Government Initiative in Arab countries. • Increasing the Acceptance / Electronic Delivery Channels . • Improving Banking Technology Infrastructure. • Developing Appropriate Legal Environment. • Increasing Customers Awareness about the Benefit of Using Cards. • Increasing the banking Transparency Concerning the Cost and Interest Rate of Credit Cards.

37. 4.2 Recommendations • To Central Bank Decision Makers: • To support banks in their efforts to increase the usage of credit cards. • To develop and maintain a database for the usage and the issuance of credit cards. • To Government Decision Makers: • To develop the legal environment to support the usage of credit cards. • To develop the infrastructure required for e-government • To encourage Public Private partnership for providing the adequate technology solutions.